In the lungs, neuronal M-2 muscarinic receptors Limit ACh release from parasympathetic nerves. In antigen-challenged animals, eosinophil proteins block; these receptors, resulting in increased ACh release and vagally mediated hyperresponsiveness. In contrast, diabetic rats are hyporesponsive and have increased M-2 receptor function. Because there is a low incidence of asthma among diabetic patients, we investigated whether diabetes protects neuronal M-2 receptor function in antigen-challenged rats. Antigen challenge of sensitized rats decreased M-2 receptor function, increased vagally mediated hyperreactivity by 75%, and caused a 10-fold increase in eosinophil accumulation around airway nerves. In antigen-challenged diabetic rats, neuronal M-2 receptor function was preserved and there was no eosinophil accumulation around airway nerves, Insulin treatment of diabetic rats completely restored loss of M-2 receptor function, vagally mediated hyperresponsiveness, and eosinophilia after antigen challenge. These data demonstrate that insulin is required for development of airway inflammation, loss of neuronal M-2 muscarinic receptor function, and subsequent hyperresponsiveness in antigen-challenged rats and may explain decreased incidence of asthma among diabetic humans.